The big McMakeover

After a decade of decline, McDonald's is booming. Profits are up, and their UK restaurants served 88 million customers last year. So how did we rediscover our appetite for cheap burgers? Patrick Barkham reports

The big McMakeover

After a decade of decline, McDonald's is booming. Profits are up, and their UK restaurants served 88 million customers last year. So how did we rediscover our appetite for cheap burgers? Patrick Barkham reports

A khaki green cafe restaurant has quietly materialised in Hemel Hempstead. Under subdued lamp light, with the indie rock of the Editors playing in the background, a lunching doctor sits on a curvy chair modelled on Arne Jacobsen's modernist classic. He could have chosen Rainforest Alliance certified freshly ground coffee, with British organic milk, or a free-range egg, delivered by a lorry powered by biodiesel from recycled cooking oil, and a bag of carrot sticks or fresh fruit. (He couldn't have had a salad because Hemel has sold out.) But he has plumped for a Filet-o-Fish, fries and a fizzy drink.

Under its golden arches, and under our very eyes, McDonald's has been transforming itself. And today it announces the fruits of its labours: financial results for 2007 that are expected to be excellent around the globe and, in Britain, a triumph. The US-based chain is now selling more burgers than at any time since it arrived in Britain 34 years ago. Last month, there were more than 88 million visits to its 1,200 high-street restaurants and drive-throughs in this country - 320,000 more people each day than in December 2006. Sales are growing almost as quickly as in the 80s boom, and this year will help fund a $2bn expansion around the globe.

Its popularity and profits signal a remarkable comeback. At the end of the 1990s, the company - founded when Ray Kroc teamed up with Dick and Mac McDonald to open the Des Plaines restaurant in 1955 - was in trouble. Following the McLibel case, in which two environmental activists were sued by the coorporate giant and (in the end) won, its golden arches had become emblematic of all that was rotten in capitalism; an obesity crisis in the western world loomed large; there was disdain for the dead-end McJob; and Britain's BSE scare recruited an army of vegetarians. A new scepticism about the junk food industry was powerfully articulated by Eric Schlosser's Fast Food Nation and Morgan Spurlock's Super Size Me film and the chain's retaliatory PR offensive looked cackhanded. From 1999, annual UK sales stagnated at £1bn. In 2005, its profits collapsed by almost two-thirds, from £96.6m to £36.9m. Its restaurants seemed tired and its dwindling band of customers appeared embarrassed to be there. McDonald's was dying.

Two years later, it is hard to see what, in the wider world, has changed. Last year's headlines are a litany of potential PR pratfalls: "Fast food 'is almost as salty as the sea'", "Prince says McDonald's should be banned", "McDonald's accused of 'piracy' by chair firm" are just three. Then there are the stories about a knife scanner fitted at a McDonald's in Tottenham, £125 parking fines for folk who don't finish their drive-through meals within 45 minutes, and news from the US that McDonald's was offering Happy Meal coupons on school report cards while scientists found that preschool children preferred the taste of food in McDonald's packaging to identical, unbranded meals.

But there was also an unobtrusive drip of positive stories. Last year it was reported that McDonald's now only sold sustainably farmed coffee certified by the international environmental charity Rainforest Alliance; it launched free, unlimited Wi-Fi in hundreds of its restaurants; it is turning its cooking oil into biodiesel to power its fleet of 155 lorries; is voluntarily raising what it pays for beef and pork by 5% above the market rate to help British farmers; and it only sells organic British milk (accounting for 5% of all supplies bought in Britain).

Then there are the new McDonald's replacing the old. Gone are the garish red signs, the strip lighting, the tacky plastic seats and sinister clowning Ronald. An appealing dark green log cabin-style building has popped up as a drive-through in Enfield's business park. From Eltham High Street in south-east London to Camberley in Surrey are sleek green McDonald's, all colourful retro modernism inside. By the end of last year, 140 outlets had been "reimaged". This year, another 200 will be given what McDonald's calls the "less is more" treatment.

What is going on? Has McDonald's become a green-on-the-outside, green-on-the-inside modern restaurant, its record profits a sign that it has won back our trust? Or is its apparent reinvention one of the cleverest corporate scams of our time?

A young accountant from Watford and father of three, who loves cricket, Watford FC and quarter-pounders with cheese (in roughly that order), has some answers. Steve Easterbrook became chief executive of McDonald's UK in April 2006. He is widely credited with their change in fortunes and chuckles at the suggestion that McDonald's was like the Conservative party in its desperation to neutralise the negative perceptions clinging to its name. "The business did stall at a time when the society around us was changing as fast as it has ever done," he says. "We had begun to look tired. We hadn't read all the signals that had been sent to us, that to do business in 2007, or more importantly in 2010 and 2020, you've got to act in a different way; you've got to be more approachable."

Traditionally, McDonald's bosses have been as likely to engage publicly with their customers as to open their suppliers' chicken sheds to the world, but Easterbrook has done both, marching on to Newsnight to debate fast food with Schlosser and allowing ordinary customers to inspect the company's supply chain. "We haven't wanted to be too in your face with the communication of it," he says. "Hammering big corporate messages to people is boring. We've tried to have a more conversational tone ... [customers] don't want to be lectured or preached at, but they are interested."

Easterbrook says McDonald's success is because of both its green moves and a back-to-basics focus on burgers. He argues that the restaurant has attracted more customers by extending its opening hours (to 6am in many places), improving core food (chicken breast in its chickenburgers and nuggets), switching from filter to freshly ground coffee and only using Rainforest Alliance certified beans and British organic milk. "At our core we're a burger business. But also we're a modern, contemporary business," he says, and "reimaging" the restaurants is the most visible way to show customers that you are "with it". "If I'm a customer and walk in, I think, OK, the music's a bit more vibrant, the lighting's a bit more subtle, there's soft furnishings, if I want to sit on a settee or at a big bench table with my mates, I can. There's a little bit of something for everyone there. Hopefully, we appeal right across all sections of society."

This, then, is the glossy, green, new McDonald's. But it is the old Maccy D's that shimmies into view when I begin a day dining out in its restaurants in a drive-through north of Luton. No reimaging here: the window is decorated with an image of Ronald McDonald falling backwards. Small hatchbacks with alloy wheels inch down an obscure alleyway behind the restaurant to collect their meals.

After I try the free Wi-Fi, which works a treat, and a double bacon and egg McMuffin meal, which needs its greaseproof paper, a man who has been quietly sipping a coffee in the corner for 30 minutes comes to the counter to ask for the "deli sandwich" he has paid for. "It doesn't take over half an hour to make a sandwich, does it?" he says, exasperated. The woman behind the counter snaps back, telling him he never ordered it and certainly didn't pay for it.

"No, no, check the till roll. You're taking the piss," says the man, raising his voice. "This is the second time I've been up for this sandwich and now you're telling me I didn't order it. It's a fucking joke."

A manager as red-faced as Ronald bustles in from the backroom, the till roll is checked, and the staff realise they've made a mistake. There are apologies and a refund. Outside, I catch up with the man, Gilbert Harriott. "I'm fuming. That's taken me half an hour to get no sandwich," he says. "I'm on nightshift, my car is over the road in the garage and I was trying to kill a bit of time before the car's ready."

Customers are more cheerful at the drive-through in Hemel Hempstead, which has been given a bit of the dark green and wood makeover. Has McDonald's changed? "Their customers demand certain things, such as burgers and chips. There's not going to be a lot of business in selling salads drizzled in fair-trade oil, is there?" says Dave Miller. "Perhaps their responsibility is to make sure that the things that are popular are as appropriately reared as they can be. A lot of companies couldn't give a toss about it."

My third McDonald's is at the refurbished Hemel town centre restaurant. A man in a ski jacket enters, stuffs handfuls of napkins into his pockets, and leaves. I ask a diner whether McDonald's has improved. "They are giving you more options, but when I go to McDonald's I go for a burger. I know it's unhealthy but that's why I go here," says Hassan Elhassan. "They could improve by offering healthy food and not having burgers, but it's like, how would you improve a pub? By not selling alcohol?" Elhassan believes the issue of junk food is different from smoking. "With fatty food, it only affects you. OK, the NHS picks up the tab in an increasingly obese society," he says. "And should the government pick up the tab?" He shows me his ID as he leaves his question hanging in the air: he's a junior doctor.

The government's launch of its National Obesity Strategy in a week when McDonald's announces its success in Britain is a delicious irony not lost on many of its customers. McDonald's has reduced the salt and fats in its food over the past five years and offers nutritional information on packages, websites and in leaflets, but its classic meals are still salty, sugary and fatty. "Society is facing an issue with obesity and obesity in kids. We all want healthy kids. I've got kids, I want healthy kids," says Easterbrook. It is modern lifestyles, he says, that are causing obesity; solutions come through "responsible business, support from government and education, and people taking greater personal responsibility". Is there a correct amount of McDonald's to eat? "I don't really think it is my place to tell anyone what they should and shouldn't eat. There are so many variables," he says, pointing out that the average customer eats three of their 90 meals a month in McDonald's.

From a distance, the illuminated menu at the Hemel drive-through looks as if it might be a salad bar: all but three of 21 food pictures feature plump, curly green lettuce poking from burgers and nestling next to nuggets. But all four McDonald's I visited were unable to sell me their advertised side salad instead of fries: it was always "sold out". "We absolutely should be offering salads," says Easterbrook. "I would expect salads to be available in every restaurant at all times." So it isn't an illusion of choice? "I'd be disappointed if that was the case. They should be available year-round." McDonald's claims that 90% of its restaurants last week had salads in stock.

This year will see more innovations. Next week, McDonald's begins an assault on the fast-growing gourmet burger market, with a new "deluxe" beefburger and chickenburger on "more artisan bread", such as ciabatta. In the US, McDonald's is introducing baristas to take on Starbucks; in recession-fearing Britain, Easterbrook senses rich pickings. As people feel the pinch, certain "coffee shops" and "pizza, chicken and gourmet places" are "beginning to look overpriced" compared with McDonald's, he says. Green moves include a project using waste to heat public buildings in Sheffield. McDonald's admits a zero waste-to-landfill strategy is still some way off; so too is free-range chicken meat. Easterbrook says the British poultry industry does not yet have the capacity, although McDonald's is funding an experimental farm to look at ways of improving animal welfare.

Cynics might assume its environmental moves are mere greenwash but "they are more than cosmetic," according to Tim Lang, professor of food policy at City University. "I was sceptical when McDonald's started altering its menus and playing around with greener options. I thought it was a temporary blip, but they've hardwired it into their system. There is another problem, however - will they be able to maintain this commitment to more sustainable foods? And will they be able to maintain their prices? The fundamentals of the food supply chain are going in an awesome direction - energy, oil, water and food commodity prices are all rising. McDonald's is no longer in denial mode. They are more engaged, but will they be able to engage with these fundamentals? They will not be alone. All big food companies are facing these changes. But as a meat purveyor, McDonald's is going to be very exposed."

What seems to have changed, and what is most noticeable among the customers I meet, is an absence of embarrassment or defensiveness about dining under the golden arches. There is an acute awareness of the health perils of junk food and a healthy cynicism about the corporate food industry, but it no longer seems to affect McDonald's sales. Giles Gibbons, managing director of Good Business, the "corporate responsibility consultancy" created by Steve Hilton (the man who rebranded the Conservatives), believes that customers are still not completely convinced by its revamp. McDonald's comes bottom of Good Business's "concerned consumer index", which suggests that people remain suspicious of its brand. "The business has regenerated itself but the brand is lagging behind," he says. "It's a very long road. You can't win people's trust back overnight. You've got to continue to take leadership decisions that people are delighted and surprised by, and over time that will lead to people feeling more trusting and happy to associate themselves with you."

Why McDonald's is thriving despite this enduring cynicism is because people have realised that their concerns about obesity, industrial food production and environmental degradation cannot be the fault of one brand, argues Gibbons. Or, to put it a different way, if all global food corporations are bad as each other, why worry unduly about McDonald's? "Companies have responded, but people also understand the issue of obesity better," says Gibbons. (It's only Prince Charles who makes crotchety statements about banning McDonald's these days.) "The debate is more grown-up at the same time as McDonald's has evolved. The combination of these two factors means that people are less embarrassed to be associated with it."

Back in Luton, and in a sleek "reimaged" McDonald's in Chancery Lane, central London, young diners are both cynical and untroubled by their burger meals. Darren Collings, 20, is impressed by the new, "Starbucksy" image. He and his friends are concerned by Jamie Oliver's exposé of battery chickens and want McDonald's to do more about its waste, but are still seduced by its convenience - and its burgers. "The whole concept of McDonald's is burger, chips and Coke. That's what it is," he says. No one is eating a salad, although Alex Roberts, 17, a student from Luton, reckons that McDonald's has moved with the times with its green initiatives. "They are changing, but they are going to sell the stuff that sells, like Big Macs," he says. "It still makes you fat, doesn't it?".